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Passing of the torch: Samsung's “crown-prince” steps up

Samsung will appoint Lee Jae-yong, only son of ailing chairman Lee Kun-hee, to the board of directors on Thursday, signalling a momentous shift of power.
By
October 26, 2016
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Following the steady transition of power that has been occurring for a while now, Lee Jae-yong, current vice chairman of Samsung Electronics and only son of ailing Samsung chairman Lee Kun-hee, will be appointed to Samsung’s board of directors at a shareholder meeting to be held Thursday morning.

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The appointment will signal the dawn of a new era for Samsung under the increasing control of a younger generation of the Lee family. But it will also finally provide the younger Lee with the opportunity he has been waiting for to implement real change at Samsung Electronics.

As The Korea Herald reports, “Expectations are high on what the 48-year-old grandson of Samsung Founder Lee Byung-chull has in mind to save the tech giant”. (For what it’s worth, the vocal American hedge-fund that has been encouraging Samsung to list the company on the U.S. stock market is positive about the move, saying they are “optimistic”.)

Lee's appointment will put Samsung in a difficult position to ignore outside views and investors.

Against this backdrop, Korean analysts claim Lee’s appointment “will put Samsung in a difficult position to ignore outside views and investors”. Lee will share the boardroom with three other internal directors along with five external directors. However, the external directors have not voted against the agenda in 15 years, making Samsung’s own directors the real decision makers.

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Despite the historical significance of the appointment, which is expected to occur smoothly tomorrow morning at 10 AM local time, some observers think it doesn’t go far enough. Park Sang-in, a professor at the Graduate School of Public Administration at Seoul National University told The Korea Herald:

To deal with the crisis the company faces, Lee needs to take up a CEO role, not a board of director role, to show responsibility in management.

South Korean cultural norms prevent Lee from assuming full responsibility for the company while his father is alive. Becoming a registered board member is, however, the final hurdle to Lee being appointed as Samsung chairman. But more than that:

It is a symbolic move for Samsung. Starting from Oct. 27, Lee Jae-yong will be taking the substantive responsibility, leadership and governance over Samsung Electronics.

Following Lee’s appointment, we will not only finally find out how much money he makes (all directors are required to publicly disclose salaries exceeding $441,000), we will also finally see what the next generation of Samsung’s ruling family has in mind for the company in this, its most desperate hour.

What do you think Lee should do? Should he take the role of CEO?